Tax-Deferred Retirement Accounts

Yesterday I briefly hit on the fact that the emergency Fed rate cut will do little to help those whose retirement income relies on cash investments, such as savings accounts and CDs.

Interestingly, though, the rate cut, and other moves to help build “confidence” in the market (like the bond insurer bailout) could help those with investment retirement account like 401(k)s and IRAs. Unfortunately, many people still don’t realize the importance of these tax-deferred retirement accounts. Country Insurance & Financial Services found the following about tax-deferred retirement accounts:

Americans’ admission to their lack of awareness is on target, as half of those surveyed could not name a tax-free or tax-deferred investment.  The right answer – 401(k) or an IRA – was selected by only 50 percent.  Further, more than one-third (36 percent) currently do not have an IRA or 401(k) account.

Investment diversity is an important thing, especially in uncertain economic times like these.  I would consider tax-deferred retirement accounts for some of your retirement investments.